An interesting and well-publicised example of market forces at work has been the knock-on effect of Lockout Laws on the Kings Cross precinct now known as Potts Point and Elizabeth Bay. In February the Sydney Morning Herald reported that the median unit price for Potts Point had increased 25% since the laws had been introduced in December 2014. More recently the same paper highlighted the auction of 614/13-15 Bayswater Road, Potts Point which sits right in the heart of the Kings Cross district. Next door to what was the bustling Hugo’s Nightclub (and Dancers strip-club a few years earlier), and opposite the now dormant Mansions Hotel – it’s obvious to everyone that things are a lot quieter here today. While the re-birth and gentrification of Kings Cross is still yet to actually occur, many savvy buyers could see potential in the spacious apartment pushing it’s price at auction to 16% ($230,000) above the reserve of $1.4m.
While that might seem a high price it pales in comparison to what speculative buyers are paying for off-the-plan apartments in the nearby Omnia redevelopment of what was the rundown Crest Hotel. CBRE claims 66sqm one-bedroom apartments with no parking start at $1.64m, 80sqm two-bedrooms at $1.91m, and if you want parking you’ll need to spend $2-2.7m.
Hotel conversion to apartments is nothing new in the Potts Point/Elizabeth Bay area. Despite questionable build quality, converted blocks such as the Rex, Gazebo and Encore (the former Sebel Townhouse) initially struggled with resale values but have found their feet in what is now considered the “Paris-end” of the peninsular. It will be interesting to see how quickly similar gentrification takes to spread south towards Darlinghurst.
The Lockout Laws have accelerated price growth in a pocket that was already performing well. Their effect has been twofold – as they drive out noisy late-night revellers to Newtown, The Star Casino and Double Bay, the empty venues left behind have become ideal development sites for ensuing gentrification. Even if the controversial laws are eventually repealed, it is difficult to envisage Kings Cross ever returning to the way it was – it appears the underlying demographics have been changed irrevocably.
Gradual changes like this highlight one of the biggest differences between Buyers Agents and our Sales Agent counterparts. Top sales agents know their patch better than anyone, and rely on up-to-the-minute buyer insight to extract the best possible price from emotional purchasers. That insight is valuable, but is also very specific to a particular location – a better deal for the buyer might have been just around the corner or in an adjacent suburb.
Successful Buyers Agents are always looking at influences, like the Lockout Laws, across the whole Sydney and Brisbane Metropolitan market. Where are changes occurring and what sustained capital/rental growth opportunities do they offer for our clients? For investors and owner-occupiers interested in achieving above average growth and returns, this is one of the most valuable insights we provide.
Feel free to contact Alex Henderson or John Molloy if you would like to discuss how we may be able to assist you in sourcing a residential property in this strong market.